United Lawsuit: Claims of Manipulated Redemption Rates

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Two New Jersey residents, Robert Gordon and Melissa Chan, jointly filed a lawsuit against United  recently for breach of good faith and fair dealing with claims that the airline manipulated its mileage redemption rates in order to force MileagePlus members with more miles to redeem more of them for certain rewards, in this case hotel stays (flight redemptions are published and fixed).

The way this came about is that Gordon and Chan were trying to book a room at the same hotel for the same dates using their United miles. Chan had 41,773 miles in her account – several thousand more than Gordon – and United’s reservations system quoted her a mileage redemption rate of 3,750 more miles than Gordon was quoted for the same service.

Gordon claims he called United to find out why and was told that United uses an algorithm that adjusts the number of miles needed for a reward booking depending on the number of miles in a customer’s MileagePlus account. While it’s well known that airlines actually give elite flyers preferential rates on cars and hotels booked with miles, in this case it looks like it adjusts the mileage redemption as a proportion of the miles in a member’s account.

However, even though Chan had more miles in her account, I suspect that Gordon might have elite status and might have gotten the preferential rate and the pair does not realize this (though discounts are usually more than 3,750 miles).

For example, I checked out hotels in Phoenix using United’s hotel and car booking page and found a couple for as low as 15,000 miles a night without logging in.

Screen shot 2013-10-10 at 11.11.28 AMHowever, when I logged into my MileagePlus account as a Premier Platinum elite, I found that the rates had dropped to 10,600 miles – 4,400 miles less and well within the range that Chan and Gordon noted.

Screen shot 2013-10-10 at 11.26.18 AMSo though the lawsuit does not say whether Gordon has elite status or not, what I think might have happened is that he has elite status (even low-tier elites like Premier Silvers get a discount on mileage redemptions for hotels and cars) and that he was given a lower redemption rate when he was logged in and that the pair mistakenly attributed it to Chan’s having more miles in her account and thus being charged a higher figure. Sounds like their lawyer should have done his or her homework!

As I said, it’s not clear yet whether elite status played a part in this, but if it did, this lawsuit like many others against frequent flyer programs will likely go nowhere fast.

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